Correlation Between L3Harris Technologies and HEICO
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies and HEICO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining L3Harris Technologies and HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and HEICO, you can compare the effects of market volatilities on L3Harris Technologies and HEICO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in L3Harris Technologies with a short position of HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and HEICO.
Diversification Opportunities for L3Harris Technologies and HEICO
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between L3Harris and HEICO is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO and L3Harris Technologies is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on L3Harris Technologies are associated (or correlated) with HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of L3Harris Technologies i.e., L3Harris Technologies and HEICO go up and down completely randomly.
Pair Corralation between L3Harris Technologies and HEICO
Considering the 90-day investment horizon L3Harris Technologies is expected to generate 7.86 times less return on investment than HEICO. In addition to that, L3Harris Technologies is 1.09 times more volatile than HEICO. It trades about 0.03 of its total potential returns per unit of risk. HEICO is currently generating about 0.24 per unit of volatility. If you would invest 19,809 in HEICO on August 24, 2024 and sell it today you would earn a total of 1,733 from holding HEICO or generate 8.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. HEICO
Performance |
| Timeline |
| L3Harris Technologies |
| HEICO |
L3Harris Technologies and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and HEICO
The main advantage of trading using opposite L3Harris Technologies and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies position performs unexpectedly, HEICO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HEICO will offset losses from the drop in HEICO's long position.| L3Harris Technologies vs. Lockheed Martin | L3Harris Technologies vs. General Dynamics | L3Harris Technologies vs. Raytheon Technologies Corp | L3Harris Technologies vs. Huntington Ingalls Industries |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |